House price expectations nearing 2003 peak levels

• House price
expectations just a fraction below previous peak
levels.• Housing confidence declines as
fewer see now as a good time to buy.•
Interest rate expectations remain steady.

House
price expectations are approaching record levels according
to the latest ASB Housing Confidence Survey.

In the
three months to January, a net 59% of respondents now expect
prices to rise over the next 12 months, just a fraction
below the January 2003 peak of 61%. Price expectations
increased the most in Auckland and remained the highest in
Christchurch and Auckland.

However, the overall ASB
Housing Confidence Index declined to 13% from 23%. While
this decline in confidence was seen across the country,
confidence is the lowest in Christchurch and Auckland. In
these regions, net confidence has now turned negative,
indicating respondents feel that it is a bad time to
buy.

ASB Chief Economist Nick Tuffley says the
decline in confidence reflects the shortage of housing
available for sale.

“Listings remain low and have
not kept up with the modest increase in demand,” Mr
Tuffley says. “Housing inventory levels have fallen
sharply and the market is tilted in favour of sellers.
Supply shortages have been most acute in Christchurch and
Auckland. As a result, price increases are strongest in
these areas.”

Interest rate expectations remained
stable in the latest survey, with only 32% of expecting
interest rates to rise over the next 12 months.

“This is consistent with our view on the OCR and
floating mortgage rate,” says Mr Tuffley. However, Mr
Tuffley warns borrowers that change may be on the horizon.
“Fixed mortgage rates are likely to increase over the
coming year as the market gradually moves to anticipate cash
rate increases from the RBNZ.”

Rocket Lab has signed a Commercial Space Launch Act Agreement with the National Aeronautics and Space Administration (NASA). The agreement enables Rocket Lab to use NASA resources - including personnel, facilities and equipment - for launch and reentry efforts. More>>

ALSO:

Reserve Bank governor Graeme Wheeler says some market commentators are predicting further declines in interest rates that would only make sense for an economy in recession, although some easing is likely to be needed to maintain New Zealand’s economic growth. More>>

Legal advice sought by the Hawke’s Bay Regional Council on the Ruataniwha Dam consent conditions has confirmed that farmers who sign up to take water from the dam could be required to reduce the intensity of their farming operation to meet the catchment’s strict nitrogen limit. More>>

Health and safety law reform sparked by the Pike River coalmine disaster has been reported back from the industrial relations select committee with weakened requirements on small businesses to appoint health and safety representatives and committees. More>>

The value of fruit exported rose 20 percent (up $330 million) for the June 2015 year when compared with the year ended June 2014. Both higher prices and a greater quantity of exports (up 9.0 percent) contributed to the overall rise. More>>